John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (8244)	9/12/2007 11:06:20 PM
From: Hawkmoon	Read Replies (1) of 33421

a contraction in S&P 500 operating earnings and thus a contraction in both the PE Multiple and a downtrend in equity prices. Wait.. as I understand it, some 40% of current S&P earnings are derived from overseas. So how does a lower dollar result in lower earnings? Furthermore, should the dollar collapse, how does that translate into equity valuations. If the DOW is 13,000 and the USD falls 10%, will not the true value of the DOW, in ratio, now be 14,300? I certainly believe that a lower dollar will hurt China since they peg the Yuan to the USD. They are already facing major inflationary pressures, as well as trade protectionism from Europe and other countries. Just curious... Hawk

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